baier91 - 1/17/2016 20:32

Everyone on here is complaining about the prices and wondering how everyone is paying $320/acre cash rent. Inputs have come down substantially. And yes the prices are very bad currently in the cash market. Does anyone look at the CBOT prices? May 2017 contract is right at $4.00. And if you hate margin calls then use an HTA contract for $0.04/bushel. Historically the basis should be decent in May. You could lock that in right now for your insured bushels. Obviously you'd have to have your own storage to make this work. Assuming a $0.10 basis and the HTA fee we are at $3.86. 200bushels/acre = $772/acre - $72.5(seed) - $145(fertilizer) - $10(fuel) - $25(chem) - $60(equipment+trucking) - $15(crop insurance) = $444.5/acre - $320/acre(cash rent) = $124.50 per acre profit.

Even if you disagree with my input costs or think you need fungicide or a little more seed or whatever there is $124/acre to work with at $320/acre rent. We are all no-till so these numbers do not reflect tillage fuel costs and we use older equipment.

Now a big question is can this farm actually consistently produce 200bushel corn on average? producing a lot of 200-220 bushel corn is much different than having a farm actually average 200 bushel/acre consistently.

Rent the ground for what you can lock in a price for, don't rent the ground for what you can sell corn for right now. That just doesn't make any sense. Just because corn is at $3.56 right now is irrelevant. The farm in question is not producing corn for the current cash price. The current cash price is for corn that was already produced.